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Who is more likely to be an entrepreneur: A 25-year-old guy or
his 50-year-old dad? Everyone knows it’s the kid.

After all, middle-aged people have mortgages and families to
support. They need a steady pay check. They can’t afford the
uncertainty that comes from running your own business. Young people are
the ones who can afford to fail and start over.

It’s a good theory. Too bad it isn’t true.

Contrary to popular opinion and the media’s fascination with
young entrepreneurs, baby boomers
are more likely to run their own businesses than 20-somethings.

According to the 2011 Global Entrepreneurship Monitor U.S. Report
-- a survey of a representative sample of the U.S. adult-age
population -- 15.4 percent of Americans aged 55-64 and 12.8
percent of Americans aged 45-54 run their own business, compared
with 0.8 percent of Americans aged 18-24 and 4.9 percent of
Americans aged 25-34.

Bureau of Labor Statistics data on both incorporated and
unincorporated self-employment show an even more extreme pattern.
The rate of self-employment is higher among people in their 60s
than even those in their 50s, let alone those in their 20s or
30s. In fact, the bureau’s surveys of American workers reveal
that people aged 65 to 69 are self-employed heads of corporations
at four times the rate of people aged 25 to 34.

All of the growth in self-employment over the past decade has
been among older Americans, the Small Business Administration
reports in its recently released publication Small Business
Economy. From 2000 to 2011, self-employment among people under 25
dropped 9 percent. Among those aged 25 to 34, it fell 8 percent,
and for those between 35 and 44, it declined 24 percent. By
contrast, self-employment among those aged 55 to 64 rose 54
percent, while it increased 36 percent among those over 65.

Even in high technology, where the media focus on entrepreneurs
Mark Zuckerberg, Andrew Mason, Chad Hurley and Sergey Brin -- all
of whom start their companies before they were 30 -- more
systematic research by Vivek Wadhwa, Richard Freeman and
Ben Rissing shows that entrepreneurs in high tech
industries are much more likely to be over 50 than under 25.

Why are baby boomers more likely than their kids to be
entrepreneurs? Researchers have two hypotheses, the second more
plausible than the first. The first explanation is a cohort
effect: Today’s young people don’t want to run their own
businesses as much as their parents did were when they were
young.

While we don’t have a lot of data on this question, what we do
have doesn’t strongly support this hypothesis. The Cooperative
Institutional Research Program at UCLA, for instance, has been
rigorously surveying incoming college freshmen at several hundred
U.S. colleges and universities in the past 40 years. CIRP
research shows that the fraction of college freshmen with the
aspiration to own a business is actually higher now than in the
early 1980s, unlike the categories of “business executive” or
“accountant and actuary," which have dropped significantly over
the past 20 years.

The more plausible explanation is an age effect. Research shows
that having savings and gaining work experience tend both to
increase the odds that people start businesses and reduce the
chances that they fail at running their own companies. Since
people tend to accumulate both experience and savings over time,
it stands to reason that middle-aged people are more likely to be
entrepreneurs than 20-somethings.

If you’re a baby boomer contemplating entrepreneurship, you might
be held back the greater responsibilities you have than people in
their 20s. But you also have more experience and capital. The
data suggest that greater experience and savings trumps greater
responsibility in explaining what people decide to do about
entrepreneurship.